Written by Gaurang Shah, Real Estate Broker | Shah Team, Royal LePage Flower City
Serving Toronto, Brampton, Mississauga, and the GTA
⏱ Estimated Read Time: 11 minutes
Most people come to me after spending six months researching online and still not feeling ready. They’ve read the articles. They’ve run the numbers. They’re saving. But nobody has ever walked them through the whole thing — start to finish — without skipping the complicated parts or burying the costs.
That’s what this guide does. It covers the complete first-time home buyer journey in Ontario: what you can afford, how to save your down payment correctly, every government program you’re entitled to, how the mortgage process works, what happens on closing day, and what most buyers get wrong. All of it, in the right order, with the specific numbers.
If you’re thinking about buying your first home in the GTA in 2026 — or if you’ve been thinking about it longer than you’d like to admit — this is the walkthrough you needed before you started.
What Is the Home Buying Process in Ontario?
Buying a home in Ontario is the legal transfer of property ownership from a seller to a buyer, completed through a licensed real estate brokerage and a real estate lawyer. The process is regulated provincially under the Trust in Real Estate Services Act (TRESA), enforced by the Real Estate Council of Ontario (RECO).
For most first-time buyers in the GTA, the process runs eight stages: setting your budget, getting mortgage pre-approval, hiring a real estate broker, searching for a property, making an offer, completing due diligence, arranging your mortgage, and closing. From the day your offer is accepted to the day you get your keys is typically 30 to 90 days. From first saving to closing day, the full process for most buyers takes six months to two years.
Knowing the sequence before you start makes every step easier — and helps you recognize when someone is rushing you, or when you’re ready to move faster than you think.
How Buying a Home in Ontario Works: The Key Steps
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Key Facts and Numbers — Buying a Home in Ontario (2026)
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If You Only Read One Section
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Step 1 — Figure Out What You Can Actually Afford
Most first-time buyers start in the wrong place. They find a property they love, then work backward to see if they can afford it. This almost never ends well. Start with the numbers.
Your mortgage lender will assess two ratios set by the Office of the Superintendent of Financial Institutions (OSFI). The Gross Debt Service (GDS) ratio is your total housing costs divided by your gross income — it must stay at or below 39%. The Total Debt Service (TDS) ratio adds all other debt payments to your housing costs and divides by gross income — it must stay at or below 44%.
What Is the Mortgage Stress Test in Ontario?
The mortgage stress test is a federal rule requiring borrowers to qualify at a rate higher than the one they’ll actually pay. Under Guideline B-20, you must qualify at the higher of your contract rate plus 2%, or 5.25%. If your lender offers you 4.5%, you must prove you can afford payments at 6.5%. This protects buyers from overextending if rates rise after they purchase.
A practical benchmark: on a combined household income of $120,000 with no significant existing debt, most buyers can qualify for between $600,000 and $700,000 with a 10% down payment at current rates. That ceiling drops if you carry a car loan, student debt, or other liabilities. Run the actual numbers before you fall in love with a specific property.
[Internal Link: Mortgage Affordability Calculator for Ontario Buyers]
Step 2 — Build Your Down Payment and Know the Rules
What Is a Minimum Down Payment in Ontario?
A minimum down payment is the smallest amount of money a buyer is required to put toward the purchase of a home under federal rules. In Ontario, the minimum varies by purchase price and is governed by the Financial Consumer Agency of Canada (FCAC).
The current rules, as updated by FCAC in October 2025, are:
| Purchase Price | Minimum Down Payment Required |
| $500,000 or less | 5% of the purchase price |
| $500,001 to $1,499,999 | 5% on the first $500,000 + 10% on the portion above $500,000 |
| $1,500,000 or more | 20% of the full purchase price — mortgage default insurance not available |
Most GTA homes fall in the middle bracket. On an $800,000 purchase, your minimum down payment is $55,000 — that’s $25,000 on the first $500,000 and $30,000 on the remaining $300,000.
On a $1.2 million purchase, your minimum down payment is $95,000 — $25,000 on the first $500,000 and $70,000 on the remaining $700,000. At that price point, mortgage default insurance is still available if your down payment is less than 20%.
The threshold where you must put at least 20% down — and where mortgage default insurance is no longer available — is $1.5 million, not $1 million. This changed on December 15, 2024.
What Is Mortgage Default Insurance in Ontario?
Mortgage default insurance — also called mortgage loan insurance — protects the lender if a borrower stops making payments. It is required on any insured mortgage where the down payment is less than 20% of the purchase price. In Canada, it is provided by the Canada Mortgage and Housing Corporation (CMHC), Sagen, or Canada Guaranty. The premium ranges from 0.6% to 4.5% of the mortgage amount and is added to your mortgage balance — it is not paid as a separate upfront cost.
Where Your Down Payment Can Come From
Your lender needs to verify the source of your down payment. Funds that appeared in your account recently without a clear paper trail will not pass. Acceptable sources include:
- Personal savings held in a verified account for at least 90 days
- A gift from an immediate family member (requires a signed gift letter confirming no repayment obligation)
- Withdrawals from your First Home Savings Account (FHSA)
- Withdrawals from your RRSP under the Home Buyers’ Plan (HBP)
If any portion of your down payment is a loan — even from family — your lender will treat it as a liability and factor it into your debt ratios. This can reduce your maximum purchase price.
Step 3 — Use the Programs That Exist for First-Time Buyers
Ontario first-time buyers have access to several government programs that reduce upfront costs. Most buyers do not use all of them. Here is what is available right now and how each one works.
| Program | What It Gives You |
| First Home Savings Account (FHSA) | Contribute up to $8,000 per year, lifetime maximum $40,000. Contributions are tax-deductible. Qualifying withdrawals for a first home purchase are tax-free. Couples can each hold an FHSA for a combined maximum of $80,000. |
| RRSP Home Buyers’ Plan (HBP) | Withdraw up to $60,000 tax-free from your RRSP toward a first home purchase. The withdrawal must be repaid over 15 years starting two years after the purchase year. You can combine the HBP with the FHSA. |
| Ontario Land Transfer Tax (LTT) Rebate | Up to $4,000 refunded on the provincial land transfer tax. Homes priced below $368,000 receive a full rebate. Homes above $368,000 receive the maximum $4,000 rebate and pay the balance. |
| Toronto Municipal Land Transfer Tax Rebate | An additional rebate of up to $4,475 for homes purchased within the City of Toronto. Combined with the provincial rebate, Toronto first-time buyers can save up to $8,475 in land transfer taxes. |
| First-Time Home Buyers’ Tax Credit (HBTC) | A $1,500 non-refundable federal income tax credit claimed through the Canada Revenue Agency in the year of purchase. Applies to both new and resale homes. |
| 30-Year Amortization for Insured Mortgages | As of December 15, 2024, first-time buyers purchasing with an insured mortgage (less than 20% down) can access 30-year amortization. This lowers monthly payments compared to the previous 25-year maximum. |
Federal program rules are managed by the Canada Revenue Agency. Provincial rebate rules are managed by the Government of Ontario Ministry of Finance. Toronto municipal rebate rules are managed by the City of Toronto. Verify your eligibility directly with each program before counting on the savings.
[Internal Link: What Is the FHSA and Should You Open One Before You Buy]
Step 4 — Get Mortgage Pre-Approval Before You Search
What Is Mortgage Pre-Approval?
Mortgage pre-approval is a written commitment from a lender stating the maximum mortgage amount you qualify for and the interest rate they will hold for you, typically for 90 to 120 days. It is based on a review of your income, debts, credit, and down payment savings. Pre-approval is not the same as final mortgage approval — final approval happens after a specific property is chosen and an appraisal is completed. For information on your rights during the mortgage process, visit the Financial Consumer Agency of Canada.
Getting pre-approved first does two things. It tells you your real purchase ceiling so you stop looking at homes you cannot afford. And it signals to sellers and their agents that you are a serious, qualified buyer — which matters when you submit an offer.
To get pre-approved, your lender will ask for T4 slips or a Notice of Assessment from the Canada Revenue Agency for the last two years, recent pay stubs, bank statements showing your down payment savings, and permission to run a credit check.
What Is a Credit Score and Why Does It Matter for Mortgages?
A credit score is a three-digit number — ranging from 300 to 900 in Canada — that summarizes your credit history and signals to lenders how reliably you repay debts. Mortgage lenders use your credit score to assess risk and determine what rates and products you qualify for. Scores below 680 limit your options with federally regulated lenders. Scores below 600 may push you toward alternative or private lenders with higher rates and stricter terms. Check your score at Equifax Canada or TransUnion Canada before you apply — and give yourself three to six months to improve it if needed.
Consider working with a mortgage broker rather than going directly to one bank. A broker can access products from multiple lenders and often finds better rates or terms — especially if your employment situation is not straightforward salaried income.
Step 5 — Work With the Right Real Estate Broker
What Does a Buyer’s Real Estate Broker Do?
A buyer’s real estate broker is a licensed professional who represents the buyer exclusively in a property transaction — searching for properties, preparing offers, negotiating terms, and guiding the buyer through due diligence and closing. In Ontario, all real estate brokers and agents are licensed and regulated by the Real Estate Council of Ontario (RECO) under the Trust in Real Estate Services Act (TRESA). As a buyer, you have the legal right to your own representation — always work with your own broker, not the same person representing the seller.
A good buyer’s broker does far more than book showings. They know which neighbourhoods are overpriced for what they offer. They know when to walk away from a bidding war and when a property that’s been sitting for 45 days is a deal — versus a problem. They will tell you when an offer condition is non-negotiable and when a seller will accept less.
In the current GTA market, homes are taking an average of 45 days to sell, according to TRREB January 2026 data. That elevated days-on-market figure gives you time to be thorough. A financing condition and a home inspection condition are both reasonable asks right now. Any broker who pushes you to waive them without strong justification is not working in your interest.
Step 6 — Understand What the GTA Market Is Doing Right Now
The Toronto Regional Real Estate Board released its January 2026 Market Watch on February 4, 2026. There were 3,082 home sales — down 19.3% from January 2025. New listings came in at 10,774, down 13.3% year-over-year. The MLS Home Price Index composite fell 8% year-over-year. The average selling price dropped 6.5% to $973,289 — the first time the GTA average has been below $1 million since 2021.
For first-time buyers, this data tells you one thing: you have more choice and more negotiating power than at any point in recent memory. Elevated inventory, longer days on market, and motivated sellers have created conditions that favour prepared buyers. TRREB’s Chief Information Officer Jason Mercer noted that buyers will continue to benefit from substantial negotiating power in 2026, particularly in the condominium apartment segment.
The hesitation in the market is real and the reason is understandable. TRREB’s Ipsos polling found that GTA homebuying intentions for 2026 dropped five percentage points compared to 2025, to 22% of respondents. The main reason is economic uncertainty — US trade policy and its effect on Ontario jobs. That caution is rational. But there is a difference between waiting because you are not financially ready and waiting because you are afraid of uncertainty. If your income is stable, your down payment is built, and your mortgage payments would be less than your current rent, uncertainty is a reason to buy carefully — not a reason to wait indefinitely.
| Not sure what any of this means for your situation specifically?
The market numbers are one thing. Your income, your savings, your timeline — those are another. If you want to sit down with someone who knows the GTA and can give you a straight answer on where you stand, the Shah Team at Royal LePage Flower City is a good place to start. No pressure, no obligation. Call or text: 647-892-2411 |
Step 7 — Make an Offer and Navigate the Conditions
What Is an Agreement of Purchase and Sale in Ontario?
An Agreement of Purchase and Sale is a legally binding contract between a buyer and seller specifying the price, deposit, closing date, and any conditions attached to the purchase. Once both parties sign, it is enforceable. In Ontario, these agreements are regulated under the Real Estate Council of Ontario (RECO) framework and your broker prepares the document on your behalf.
What Is a Financing Condition?
A financing condition is a clause in an offer that gives the buyer a set number of business days — typically five to seven — to obtain formal mortgage approval for the specific property being purchased. If the buyer cannot secure financing within that period, they can walk away and receive their deposit back. In today’s market, including a financing condition is standard practice and reasonable to request.
What Is a Home Inspection Condition?
A home inspection condition gives the buyer the right to hire a qualified home inspector to assess the property before committing to the purchase. If the inspection uncovers problems the buyer cannot accept, they can walk away within the condition period and recover their deposit. A qualified inspector checks the structure, roof, foundation, electrical system, plumbing, insulation, and HVAC. Inspections cost $400 to $700 in the GTA depending on property size. They are worth every dollar.
What Is a Deposit in a Real Estate Transaction?
A deposit is a sum of money paid by the buyer after an offer is accepted, held in trust by the real estate brokerage and applied toward the down payment at closing. In Ontario, deposits are typically 1% to 5% of the purchase price. The deposit demonstrates the buyer’s commitment to the transaction. If the buyer walks away without a valid condition protecting them, the deposit may be forfeited.
In today’s slower market, sellers are more willing to negotiate than they have been in years. Correctly priced homes still sell close to list price. But properties that have been sitting for several weeks often have room to negotiate on price, closing date, or inclusions. Your broker should know which category the property you’re interested in falls into.
[Internal Link: What Happens If My Appraisal Comes In Low in Ontario]
Step 8 — Closing Costs and What Happens on Closing Day
The single biggest financial surprise for first-time buyers is not the mortgage. It’s the closing costs. Most buyers forget to budget for them until two or three weeks before closing, when their lawyer sends a detailed breakdown.
What Are Closing Costs in Ontario?
Closing costs are the fees and taxes a buyer pays to complete the legal transfer of property ownership, separate from and in addition to the down payment. In Ontario, closing costs typically run 1.5% to 2.5% of the purchase price outside Toronto, and 3% to 4% in the City of Toronto. On a $900,000 home in Brampton, budget $13,500 to $22,500 beyond your down payment. This money must be in your account before closing day — it cannot come from your mortgage.
What Is Land Transfer Tax in Ontario?
Land transfer tax is a provincial tax paid by the buyer on the purchase of any property in Ontario, calculated as a percentage of the purchase price on a marginal rate scale. First-time buyers are eligible for a rebate of up to $4,000 on the provincial portion. On purchases above $368,000, you pay the tax above the rebate ceiling. The full rules and current rates are published by the Government of Ontario Ministry of Finance.
Here is what total closing costs include:
- Ontario Land Transfer Tax: On a $900,000 home outside Toronto, the provincial LTT is approximately $16,475. First-time buyers receive a rebate of up to $4,000, reducing it to roughly $12,475.
- Toronto Municipal Land Transfer Tax: Buying within the City of Toronto triggers a second, equal tax. First-time buyers receive a separate rebate of up to $4,475 on the Toronto portion.
- Legal fees: Budget $1,500 to $2,500 for a real estate lawyer, plus disbursements for title searches and registration.
- Home inspection: $400 to $700.
- Title insurance: Typically $200 to $400. Most lenders require it. It protects against title fraud and unknown title defects.
- Mortgage default insurance premium: If your down payment is under 20%, your CMHC, Sagen, or Canada Guaranty premium ranges from 0.6% to 4.5% of the mortgage amount, added to your mortgage balance.
- Property tax and utility adjustments: You reimburse the seller for any prepaid amounts covering dates after closing.
- Moving costs: Budget $1,000 to $3,000 for a local move in the GTA.
What Is Title Insurance in Ontario?
Title insurance is a one-time insurance premium that protects a property buyer and their mortgage lender against losses from title defects, title fraud, encroachments, survey errors, and certain issues that a title search might not uncover. In Ontario, most lenders require title insurance as a condition of the mortgage. The premium is typically $200 to $400 and is paid at closing through your lawyer.
[Internal Link: First-Time Home Buyer Closing Costs in Ontario — Complete Breakdown]
What Most First-Time Buyers Get Wrong
A few patterns come up again and again — not because buyers are careless, but because no one warned them.
Waiting for prices to drop further is the most expensive habit in this market. GTA prices have already corrected sharply from 2022 peaks. Rates have stabilised. Buyers who spent 2024 waiting for the perfect entry point paid more in rent than they would have saved. The same calculation applies in 2026.
Maxing out the budget is the second mistake. A lender approving you for $850,000 does not mean you should spend $850,000. At that price, your mortgage payment plus property tax, insurance, and ongoing maintenance will absorb a significant share of your monthly income. Leave room for life — and for the unexpected.
Skipping the home inspection is the third. It became common during the frenzied markets of 2021 and 2022. In 2026, with homes sitting an average of 45 days and sellers motivated to close, you almost never need to waive your inspection to compete. Do not skip it.
Forgetting ongoing ownership costs is the fourth. Beyond the mortgage and property tax, budget at least 1% of the home’s value per year for maintenance and repairs. On a $900,000 home, that’s roughly $9,000 annually. It’s a planning estimate, not a guarantee — but plan for it regardless.
Frequently Asked Questions
How much do I need saved before I start seriously looking?
At minimum: your down payment, plus 1.5% to 4% of the purchase price for closing costs, plus three to six months of mortgage payments as a cash reserve. On a $700,000 home with 10% down, that’s $70,000 for the down payment, roughly $10,500 to $28,000 for closing costs, and a reserve on top of that. Getting pre-approved early gives you a specific number to target.
Is 2026 actually a good time to buy in the GTA?
Yes, if you are financially ready. GTA prices are well below 2022 peaks, inventory is the highest it has been in years, and rates have stabilised after multiple Bank of Canada cuts between 2024 and late 2025. What the market cannot tell you is whether your income is stable enough and your down payment is large enough. Those questions require a conversation with a mortgage professional and a real estate broker who knows your target area.
Can I combine the FHSA and the RRSP Home Buyers’ Plan for the same purchase?
Yes. You can withdraw up to $40,000 tax-free from your First Home Savings Account and up to $60,000 from your RRSP through the Home Buyers’ Plan for the same qualifying home purchase. That’s a combined maximum of $100,000 per person — or $200,000 for eligible couples. The FHSA withdrawal has no repayment requirement. The RRSP withdrawal must be repaid over 15 years starting two years after the purchase year.
What happens if my offer is accepted and my financing falls through?
If your offer included a financing condition, you can withdraw within the condition period and receive your deposit back. If you waived the financing condition and then cannot secure a mortgage, you are in breach of contract. The seller can pursue damages, and your deposit is at risk. This is exactly why financing conditions exist — waiving one without solid justification is a serious financial risk in any market.
Do I need a lawyer to buy a home in Ontario?
Yes. A real estate lawyer is required for every property purchase in Ontario. Your lawyer completes the title transfer, registers the mortgage, searches for liens and encumbrances, and manages the flow of funds on closing day. Legal fees in the GTA typically run $1,500 to $2,500 plus disbursements. The Financial Consumer Agency of Canada recommends engaging a lawyer before you make an offer — not after.
What is the difference between a fixed and a variable mortgage rate?
A fixed mortgage rate stays the same for the entire term — typically one to five years — giving you predictable payments regardless of what the Bank of Canada does. A variable mortgage rate moves with the lender’s prime rate, which is tied to the Bank of Canada’s policy rate. Variable rates can go lower or higher over your term. In the current environment with the Bank of Canada holding at 2.25%, most major forecasters expect rates to remain stable through 2026. [Internal Link: Fixed vs Variable Mortgage in Ontario — Which Makes Sense in 2026]
What if I am a newcomer to Canada buying my first home?
Permanent residents are eligible for all the programs described in this guide, including the FHSA, RRSP Home Buyers’ Plan, Ontario Land Transfer Tax rebate, and Toronto Municipal Land Transfer Tax rebate. Temporary residents — including those on work permits and student visas — face some restrictions on certain programs. Eligibility details for newcomers are outlined by Immigration, Refugees and Citizenship Canada and the Canada Revenue Agency. A mortgage broker with experience serving newcomers can help you identify which products and programs you qualify for.
What Matters Most
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| I’m Gaurang Shah, a real estate broker at Royal LePage Flower City. I’ve worked with first-time buyers across Brampton, Mississauga, Toronto, and the GTA for years — and I’m fully focused on it again.
The Shah Team works with buyers who want to understand the process clearly before they commit to anything. A 30-minute conversation costs nothing. You’ll leave with a straight answer on where you stand and what your next step actually looks like. When you’re ready, we’ll help you build a plan. Book a Free Buyer Conversation: https://meetings.hubspot.com/gaurang-reena/discovery-call-15-min Or call: 647-892-2411 |
References
- Toronto Regional Real Estate Board — January 2026 Market Watch and 2026 Market Outlook and Year in Review (February 4, 2026)
- Bank of Canada — Policy Interest Rate Decision, January 28, 2026
- Financial Consumer Agency of Canada — How Much You Need for a Down Payment (Updated October 2025)
- Office of the Superintendent of Financial Institutions — Guideline B-20: Residential Mortgage Underwriting Practices and Procedures
- Canada Revenue Agency — First Home Savings Account (FHSA) — Rules, Contribution Limits, and Withdrawal Conditions
- Canada Revenue Agency — RRSP Home Buyers’ Plan — Withdrawal Limits and Repayment Rules
- Canada Revenue Agency — First-Time Home Buyers’ Tax Credit (HBTC)
- Government of Ontario Ministry of Finance — Ontario Land Transfer Tax and First-Time Buyer Refund
- City of Toronto — Municipal Land Transfer Tax Rebate for First-Time Purchasers
- Real Estate Council of Ontario — Buyer Representation and TRESA
- Canada Mortgage and Housing Corporation — Mortgage Loan Insurance: Premiums and Rules
- Department of Finance Canada — 30-Year Insured Mortgage Amortization for First-Time Buyers (December 15, 2024)
- Equifax Canada — Credit Scores and Mortgage Eligibility
- TransUnion Canada — Credit Scores and Borrower Assessment
